India: Delivery startup Dunzo Digital in funding talks, aims to raise $30-40m

Dunzo
Photo: Dunzo website

Delivery start-up Dunzo Digital Pvt. Ltd, one of the few survivors from the hyperlocal start-up wave of 2015, is in talks to raise $30-40 million from new and existing investors, three people aware of the discussions said.

Dunzo, which raised $12 million from search engine giant Google’s corporate development arm in December, has held talks with a clutch of potential new investors including Sequoia Capital, the people mentioned above said, on condition of anonymity. They added Dunzo hadn’t finalized a deal yet and that the new funding round could be done in two tranches.

Existing investors, including Google, Blume Ventures and Aspada, are also expected to participate in the new round, the people said. Among new investors, cab-hailing start-up Ola had also held talks with Dunzo for a potential investment, but those talks fell through, the people said.

Apart from the next round of capital, Dunzo will raise more money in quick succession over the next two years in order to add new product categories and launch in more cities, the people mentioned above said.

Over the past year, Dunzo has aggressively expanded in categories including food and groceries delivery, which are currently dominated by the likes of well-funded start-ups such as Swiggy and BigBasket.

“The space that Dunzo operates in is extremely intensive (competition-wise) and they are up against some well-funded rivals who have hundreds of millions of dollars at their disposal. To compete against them, Dunzo needs to raise a sizable amount of funding to keep expanding at a rapid pace,” one of the people mentioned above said.

Dunzo declined to comment.

Dunzo, which was founded in 2015, currently operates in Bengaluru and is also set to launch in Pune in the next few months. Besides existing investors such as Google, Aspada and Blume, Dunzo also counts Google India managing director Rajan Anandan as an angel investor. The firm delivers everything from food and groceries and clothes to medicines and cigarettes and liquor from nearby stores. It also doubles up as an on-demand intra-city courier for customers.

Along with Swiggy and Grofers, the Bengaluru-based start-up is one of the few survivors from the bunch of hyperlocal start-ups that suddenly caught the fancy of investors in 2015 only to collapse as quickly as their business models were found to be suspect. So-called concierge start-ups like Goodservice, Qlivery and others either folded up or were sold at firesale prices or changed tack.

Dunzo is one of the few delivery start-ups that’s thriving. Its large and efficient supply chain network is key to the company’s success so far. Though whether it can replicate it in other cities is far from clear.

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This article was first published on livemint.com.